EFFECT OF STRATEGIC ORIENTATION ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NANDI COUNTY, KENYA.

Abstract

The main purpose of the study was to investigate the effect of strategic orientation on performance of small enterprises in Nandi County. The specific objectives include; the effect of learning orientation on small and medium enterprises performance, effect of entrepreneurial orientation on performance of small and medium enterprises, effect of market orientation on performance of small and medium enterprises, effect of customer orientation on performance of small and medium enterprises and effect of technology orientation on performance of small and medium enterprises. Resource-Based View Theory informed the study. An explanatory research design was adopted. The target population comprised of 2053 managers/owners of registered small and medium enterprises and sample size of 335 was selected. Cluster sampling technique was utilized. Data was obtained using questionnaires and interview schedules. Descriptive statistics and inferential statistics were used. Hypotheses were tested by use of multiple regression model. The findings showed that learning orientation (β1 = 0.499, p<0.05) and entrepreneurial orientation (β2 = 0.171, p < 0.05) had a positive and significant effect on small and medium enterprises performance. Market orientation (β3 = -0.018, p > 0.05) had no significant effect on small and medium enterprises performance. Customer orientation (β4 = 0.169, p < 0.05) and technology orientation (β5= 0.216, p < 0.05) had a positive and significant effect on small and medium enterprises performance. In addition, R2 = 0.559 which indicated that dimensions of strategic orientation explains 0,559 units of SME performance. The study concludes that learning orientation, customer orientation, technology orientation and entrepreneurial orientation makes it possible for small and medium enterprises s to achieve competitive advantage and thus a higher level of performance. The implications for the study are for small and medium enterprises to focus on understanding customers and identifying their needs. Additionally, there is need for commonality of purpose in the organization and learning needs to be seen as an investment rather than an expense. Small and medium enterprises s need to focus more on product research and development together with technological leadership and innovation in order to enhance their performance. It is also prudent for those in the sales department to share information within their business concerning competitors’ activities in order to attain competitive advantage. Future research in this area should consider a longitudinal study where SMEs are asked to operationalize certain Orientations over a period of time and then the performance of SME is measured before and after such a trial period.